A provocative, unsponsored assessment of current and future legal, regulatory, marketplace, and cultural issues affecting telecommunications and information policy presented by Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University

Thursday, April 25, 2013

The FCC’s Role in the Two Plus Two Wireless Market

The
U.S. national wireless market cleaves between AT&T/Verizon, with a combined
70% market share, and Sprint/T-Mobile, barely able to afford essential next
generation network spectrum.How did AT&T
and Verizon become so dominant?A lot
has to do with deep pockets and the ability to make the necessary capital
expenditures for growth.Hats off to
these carriers for taking the risk.

But
as much as AT&T and Verizon desire recognition, they had a silent partner
who facilitated a powerful first mover advantage: the Federal Communications Commission.The FCC created a “wireline set aside” back
in 1981 granting 40 MHz of free spectrum to incumbent telephone companies.Of course these carriers took the risk to
invest in a new mobile wireless radio technology, but how could they lose having
received one of the most expensive components free of charge?Additionally the FCC granted them a tremendous
market entry headstart as second carrier market entry could occur only after a
comparative hearing often among a dozen or more applicants.

AT&T
and Verizon have successfully leveraged their first mover advantages and they
will not let anything or anyone prevent them from capturing great rents.Not even the FCC.

So if and when the FCC considers whether to confer
any sort of new spectrum access opportunity for lesser carriers—as recommended
by the U.S. Department of Justice—expect AT&T and Verizon to scream bloody
murder.What was good for their goose is
not okay for the lesser ganders now.

About Me

Rob Frieden serves as Pioneers Chair and Professor of Telecommunications and Law at Penn State University.He also provides legal, management and market forecasting consultancy services and has written four books, most recently Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications published by Yale University Press. Rob has written over one hundred articles in law reviews and telecommunications policy journals and has provided commentary in a variety of trade periodicals. He updates a major communications treatise: All About Cable and Broadband (Law Journal Press).

Rob has held senior policy making positions in international telecommunications at the United States Federal Communications Commission and the National Telecommunications and Information Administration.In the private sector, he practiced law in Washington, D.C., and served as Assistant General Counsel at PTAT System, Inc. where he handled corporate, transactional and regulatory issues for the nation's first private undersea fiber optic cable company. Professor Frieden holds a B.A., with distinction, from the University of Pennsylvania (1977) and a J.D. from the University of Virginia (1980).